The U.S. spends more on its military than any other discretionary item. Interest on the national debt will soon top that.
In about five years, the U.S. federal government could starting spending more in interest on its debt than on the military — which accounts for more than half of discretionary spending — or domestic programs like Medicaid, The New York Times reports, citing Congressional Budget Office projections. "The run-up in borrowing costs is a one-two punch brought on by the need to finance a fast-growing budget deficit, worsened by tax cuts and steadily rising interest rates that will make the debt more expensive," the Times explains.
Years of record low interest rates have "allowed the government to take on more debt without paying more interest," says Marc Goldwein at the Committee for a Responsible Federal Budget. "That party is ending," and "by 2020, we will spend more on interest than we do on kids, including education, food stamps, and aid to families." Within 10 years, the U.S. will face more than $900 billion a year in interest payments, the CBO projects. Next year, when the federal deficit is forecast to top $1 trillion, interest costs will hit $390 billion, 50 percent more than in 2017.
Interest payments were already going to grow without the massive tax cut Republicans pushed through in December and higher spending approved by both parties in February. But the combination of the tax cuts, spending hikes, and rising interest rates puts the U.S. in the largely uncharted territory of stimulating an already booming economy, giving the government fewer tools for when a recession hits. "There's no guarantee that these forecasts will prove accurate," the Times cautions. "If the economy weakens, rates might fall or rise only slightly, reducing interest payments. But rates could also overshoot the budget office forecast." You can read more, and see some helpful charts, at The New York Times.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.
-
'The double standards don't trouble the critics'
Instant Opinion Opinion, comment and editorials of the day
By Justin Klawans, The Week US Published
-
Today's political cartoons - November 22, 2024
Cartoons Friday's cartoons - frozen assets, blazing fires, and more
By The Week US Published
-
How much of a blow is ICC arrest warrant for Netanyahu?
Today's Big Question Action by Hague court damages Israel's narrative that Gaza conflict is a war between 'good and evil'
By Chas Newkey-Burden, The Week UK Published
-
US charges Indian tycoon with bribery, fraud
Speed Read Indian billionaire Gautam Adani has been indicted by US prosecutors for his role in a $265 million scheme to secure solar energy deals
By Peter Weber, The Week US Published
-
Boeing machinists approve contract, end strike
Speed Read The company's largest union approved the new contract offer, ending a seven-week strike
By Peter Weber, The Week US Published
-
US economy still strong in final preelection report
Speed Read It grew at a solid 2.8% annual rate from July through September
By Peter Weber, The Week US Published
-
Boeing machinists reject deal, continue strike
Speed Read The rejection came the same day Boeing reported a $6.2 billion quarterly loss
By Peter Weber, The Week US Published
-
Ports reopen after dockworkers halt strike
Speed Read The 36 ports that closed this week, from Maine to Texas, will start reopening today
By Peter Weber, The Week US Published
-
Empty-nest boomers aren't selling their big homes
Speed Read Most Americans 60 and older do not intend to move, according to a recent survey
By Peter Weber, The Week US Published
-
Brazil accuses Musk of 'disinformation campaign'
Speed Read A Brazilian Supreme Court judge has opened an inquiry into Elon Musk and X
By Rafi Schwartz, The Week US Published
-
Disney board fends off Peltz infiltration bid
Speed Read Disney CEO Bob Iger has defeated activist investor Nelson Peltz in a contentious proxy battle
By Rafi Schwartz, The Week US Published